TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION 

Prisoner Tax Refund Fraud: 

Delays Continue in Completing 

Agreements to Share Information 

With Prisons, and Reports to Congress 

Are Not Timely or Complete 

September 25, 2014 

Reference Number: 2014-40-091 

This report has cleared the Treasury Inspector General for Tax Administration disclosure review process 

and information determined to be restricted from public release has been redacted from this document. 

Redaction Legend: 

2 = Risk Circumvention of Agency Regulation or Statute 

Phone Number / 202-622-6500 

E-mail Address / TIGTACommunications@tigta.treas.gov

Website / http://www.treasury.gov/tigta
HIGHLIGHTS

PRISONER TAX REFUND FRAUD: Social Security Number are assigned a prisoner 

DELAYS CONTINUE IN COMPLETING indicator. 

AGREEMENTS TO SHARE WHAT TIGTA RECOMMENDED INFORMATION WITH PRISONS, AND 

REPORTS TO CONGRESS ARE NOT TIGTA recommended that the Commissioner, 

TIMELY OR COMPLETE Wage and Investment Division, ensure that 

Memorandums of Understanding are timely 

Highlights established with the Federal Bureau of Prisons 

and all State Departments of Corrections. The 

IRS should also ensure that the required annual 

Final Report issued on report on prisoner fraud is issued to Congress 

timely and that processes are developed to September 25, 2014 identify tax returns filed that have the same 

characteristics of confirmed fraudulent prisoner Highlights of Reference Number: 2014-40-091 tax returns and determine whether these tax to the Internal Revenue Service Commissioner returns should be included in the annual report for the Wage and Investment Division. to Congress. The IRS should also ensure that 

IMPACT ON TAXPAYERS all tax returns that are filed using a prisoner 

Social Security Number are assigned a prisoner 

Refund fraud associated with prisoner Social indicator. 

Security Numbers remains a significant problem 

for tax administration. The number of fraudulent The IRS agreed with four of the six 

tax returns filed using a prisoner’s Social recommendations. The IRS did not agree to 

Security Number that were identified by the IRS develop a process to identify other tax returns 

increased from more than 37,000 tax returns in that have the same characteristics as confirmed 

Calendar Year 2007 to more than 137,000 tax fraudulent prisoner returns. Without such 

returns in Calendar Year 2012. The refunds processes the IRS annual report will not include, 

claimed on these tax returns increased from as required, information related to the filing of all 

$166 million to $1 billion. false and fraudulent tax returns by prisoners. 

WHY TIGTA DID THE AUDIT In addition, the IRS did not agree to correct a 

computer programming error that resulted in its 

This audit was initiated because prior TIGTA not assigning a prisoner indicator to 3,139 tax 

reports identified concerns with the IRS’s efforts returns TIGTA identified. Without the proper 

to identify and prevent prisoner tax fraud. The assignment of a prisoner indicator, the tax 

overall objective was to evaluate the returns are not sent through those fraud 

effectiveness of the IRS’s corrective actions to detection filters specific to a prisoner-filed tax 

identify and reduce prisoner fraud. return. 

WHAT TIGTA FOUND 

TIGTA found that the IRS has not yet shared 

fraudulent prisoner tax return information with 

Federal or State prison officials. TIGTA also 

found that the required annual prisoner fraud 

reports to Congress are not timely and that the 

reports do not address the extent to which 

prisoners may be filing fraudulent tax returns 

using a different individual’s SSN. TIGTA also 

followed up on a condition identified in a past 

review and found that IRS processes still do not 

ensure that all tax returns filed using a prisoner 
DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 20220

TREASURY INSPECTOR GENERAL 

FOR TAX ADMINISTRATION 

September 25, 2014 

MEMORANDUM FOR COMMISSIONER, WAGE AND INVESTMENT DIVISION 

FROM: Michael E. McKenney 

Deputy Inspector General for Audit 

SUBJECT: Final Audit Report – Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, and 

Reports to Congress Are Not Timely or Complete (Audit # 201340016) 

This report presents the results of our review to evaluate the effectiveness of the Internal 

Revenue Service’s (IRS) corrective actions to identify and reduce prisoner fraud. We conducted 

follow-up testing to evaluate the effectiveness of the IRS’s actions to address recommendations 

made in a previous Treasury Inspector General for Tax Administration report. In addition, we 

evaluated the IRS’s compliance with the continuing provisions of the Inmate Tax Fraud 

Prevention Act of 20081

 and the American Taxpayer Relief Act of 2012.2 This audit is included 

in our Fiscal Year 2014 Annual Audit Plan and addresses the major management challenge of 

Fraudulent Claims and Improper Payments. 

Management’s complete response to the draft report is included as Appendix V. 

Copies of this report are also being sent to the IRS managers affected by the report 

recommendations. If you have questions, please contact me or Russell P. Martin, Acting 

Assistant Inspector General for Audit (Returns Processing and Account Services). 

 

1

 Pub. L. No. 110-428, 122 Stat. 4839. 

2

 Pub. L. No. 112-240, 126 Stat. 2313. 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Table of Contents 

Background .......................................................................................................... Page 1 

Results of Review ............................................................................................... Page 6 

Fraudulent Prisoner Tax Return Information Has Yet 

to Be Shared With Federal or State Prison Officials .................................... Page 6 

Recommendation 1: ........................................................ Page 8 

Required Annual Prisoner Fraud Reports to Congress 

Are Not Timely and Do Not Address the Extent of 

Fraudulent Tax Return Filings by Prisoners ................................................. Page 9 

Recommendation 2: ........................................................ Page 12

Recommendation 3: ........................................................ Page 13 

Processes Do Not Ensure That All Tax Returns Filed 

Using a Prisoner Social Security Number Are Assigned 

a Prisoner Indicator ....................................................................................... Page 13 

Recommendations 4 and 5: .............................................. Page 15 

Recommendation 6: ........................................................ Page 16 

Appendices 

Appendix I – Detailed Objective, Scope, and Methodology ........................ Page 17 

Appendix II – Major Contributors to This Report ........................................ Page 20 

Appendix III – Report Distribution List ....................................................... Page 21 

Appendix IV – Example Letter Sent to State Departments of 

Corrections .................................................................................................... Page 22 

Appendix V – Management’s Response to the Draft Report ....................... Page 25 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Abbreviations 

EFDS Electronic Fraud Detection System 

IRS Internal Revenue Service 

MOU Memorandum of Understanding 

SSN Social Security Number 

TIGTA Treasury Inspector General for Tax Administration 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Background 

Tax refund fraud associated with prisoners remains a significant problem for tax administration. 

Figure 1 shows that the number of fraudulent tax returns filed using prisoner Social Security 

Numbers (SSN) that were identified by the Internal Revenue Service (IRS) increased from more 

than 37,000 tax returns in Calendar Year 2007 to more than 137,000 tax returns in Calendar 

Year 2012. The refunds claimed on these tax returns increased from $166 million to $1 billion. 

Figure 1: Fraudulent Tax Returns Filed Using 

a Prisoner SSN for Calendar Years 2007 Through 2012 

Refunds Refunds Refunds 

Calendar Fraudulent Claimed Prevented Issued 

Year Tax Returns (Millions) (Millions) (Millions) 

2007 37,447 $166 $137 $29 

2008 47,898 $190 $162 $28 

2009 44,944 $295 $256 $39 

2010 91,434 $758 $722 $351

2011 186,483 $3,7252 $3,569 $156 

2012 137,883 $1,005 $936 $70 

Source: IRS Criminal Investigation and IRS Wage and Investment Division. 

Legislation enacted in an effort to address fraud perpetrated by prisoners 

 The Inmate Tax Fraud Prevention Act of 2008,

3

 signed October 15, 2008, gave the 

Secretary of the Treasury temporary authority to disclose to the head of the Federal 

Bureau of Prisons tax return information for individuals incarcerated in Federal prisons 

who the Secretary has determined may have filed or facilitated the filing of a fraudulent 

return. The act stated that no disclosure may be made after December 31, 2011. 

The act also requires the Secretary of the Treasury to provide an annual report to 

Congress on the filing of false or fraudulent tax returns by Federal and State prisoners. 

 

1

 Calendar Years 2010 and 2012 refund amounts do not add up due to rounding. 

2

 The IRS indicated that this figure includes 468 returns filed by prisoners requesting refunds of more than $100,000 

and totaling $2.9 billion. This is what caused the marked increase in refunds claimed in Calendar Year 2011. 3

 Pub. L. No. 110-428, 122 Stat. 4839. 

Page 1
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

The first report completed by the IRS reporting on returns filed using a prisoner SSN was 

issued for Calendar Year 2009. 

 The Homebuyer Assistance and Improvement Act of 2010,

4

 enacted in July 2010, 

expanded the authority of the Secretary of the Treasury to also include disclosing 

prisoner tax return information to the State Departments of Corrections.5 However, the 

expanded authority to disclose prisoner tax return information to the State Departments of 

Corrections as well as the Federal Bureau of Prisons still expired on December 31, 2011. 

 The United States–Korea Free Trade 

Agreement Implementation Act,

6

 signed 

October 21, 2011, requires the Federal Bureau of 

Prisons and State Departments of Corrections to 

provide the IRS with an electronic list of all the 

prisoners incarcerated within their prison system 

for any part of the prior two calendar years or the 

current calendar year through August 31. The 

Federal Bureau of Prisons and States were required to provide the first list of prisoners to 

the IRS not later than September 15, 2012, and are to provide updated information 

annually thereafter. 

 The American Taxpayer Relief Act of 2012,

7

 enacted in January 2013, expanded the 

Secretary of the Treasury’s authority to share false prisoner tax return information with 

Federal and State prisons and gave the IRS permanent authority to share such 

information. 

Prisoner File and the Electronic Fraud Detection System (EFDS) 

To combat the continuing problem of refund fraud associated with tax returns filed using 

prisoner SSNs, the IRS compiles a list of prisoners (the Prisoner File) received from the Federal 

Bureau of Prisons and State Departments of Corrections. Various IRS offices and functions use 

the Prisoner File in an effort to prevent and detect fraud. The Prisoner File is the cornerstone of 

the IRS’s efforts to prevent the issuance of fraudulent refunds to individuals filing false tax 

returns using a prisoner SSN. 

The EFDS is the primary system used by the IRS to identify tax returns filed using prisoner 

SSNs. The EFDS consists of a series of filters the IRS has designed to evaluate tax returns for 

potential fraud. Tax returns are processed through the EFDS, whereby the primary and 

secondary SSNs listed on the tax return are matched to the Prisoner File to determine if the tax 

 

4 Pub. L. No. 111-198, 124 Stat. 1356. 

5

 General term used to refer to the various State agencies that oversee State prisons. 6

 Pub. L. No. 112-41, § 502 

7

 Pub. L. No. 112-240, 126 Stat. 2313. 

Page 2

The authority for the IRS to 

disclose fraudulent prisoner 

tax return information with 

Federal and State Prisons 

became permanent in 

January 2013. 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

return is filed using a prisoner SSN. If the SSN on the tax return matches a prisoner on the 

Prisoner File, a prisoner indicator is assigned to the tax return. 

Tax returns assigned a prisoner indicator and that meet specific criteria are evaluated to 

determine if the tax return is fraudulent. This evaluation includes screening and verifying the 

wage and withholding information reported on the tax return. For example, in the screening 

process, a tax examiner reviews the tax return for income and withholding information, **2** 

*****************************2************************************************

**********2**********. If the tax examiner concludes that the tax return is potentially 

fraudulent, the tax return is then sent for verification. In the verification process, a tax examiner 

attempts to contact the employer(s) associated with the reported income and withholding to 

confirm the income and withholding. If the tax examiner is unable to verify the income and 

withholding with the employer, the refund is frozen to prevent issuance. 

Prior Treasury Inspector General for Tax Administration (TIGTA) reports identified 

concerns with IRS efforts to identify and prevent prisoner tax fraud 

TIGTA has issued two reports on the IRS’s efforts to combat prisoner fraud since Congress 

enacted the Inmate Tax Fraud Prevention Act of 2008. In December 20108 we reported that as of 

October 2010, the IRS had not completed required agreements to allow it to disclose prisoner tax 

return information to prison officials. As a result, no information had been disclosed to either the 

Federal Bureau of Prisons or State Departments of Corrections. In addition, we identified a lack 

of managerial oversight relating to the process used to compile the Prisoner File to ensure the 

accuracy and reliability of this file. 

In December 20129 we reported that despite increased efforts by the IRS to improve the accuracy 

of the Prisoner File, some prisoner information contained in the file is inaccurate. For example, 

the file contains incomplete records, and not all facilities that house prisoners reported prisoners. 

As such, controls used to ensure that the IRS identifies fraudulent refunds on tax returns prepared 

by prisoners are not fully effective. Further, the IRS’s authority to disclose information to 

prisons expired on December 31, 2011,10 which limited the ability of prison officials to curtail 

prisoners’ continued abuse of the tax system. IRS management indicated that even though the 

authority to disclose information to prisons expired on December 31, 2011, the Federal Bureau 

of Prisons and State Departments of Corrections have been taking advantage of other voluntary 

IRS prisoner fraud programs that do not require a contract and have minimal cost to the Federal 

Bureau of Prisons and State Departments of Corrections. However, these programs only alert the 

 

8

 TIGTA, Ref. No. 2011-40-009, Significant Problems Still Exist With Internal Revenue Service Efforts to Identify 

Prisoner Tax Refund Fraud (Dec. 2010). 9

 TIGTA, Ref. No. 2013-40-011, Further Efforts Are Needed to Ensure the Internal Revenue Service Prisoner File 

Is Accurate and Complete (Dec. 2012). 10 As noted on page 2 of the report, the American Taxpayer Relief Act of 2012, enacted January 2013, has given the 

IRS permanent authority to disclose this information to the prisons. 

Page 3
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Federal Bureau of Prisons, State Departments of Corrections, and the IRS to potential 

wrongdoing, whereas prisoner tax fraud data represent known fraud for which the Federal 

Bureau of Prisons and State Departments of Corrections can take action to address. Figure 2 

details the recommendations and corrective actions contained in these reports. 

Figure 2: Prior TIGTA Audit Recommendations and 

Actions Taken by the IRS to Address Recommendations 

Page 4

TIGTA Report Recommendation Actions Taken to Date

2011-40-009 

Dec. 2010

Work with the Department of the 

Treasury to seek legislation to extend 

the period of time the IRS has to 

disclose prisoner tax return information 

to the Federal Bureau of Prisons and 

State prison officials. 

The American Taxpayer Relief Act of 2012 

gave the IRS permanent authority to share 

false prisoner tax return information with 

Federal and State prisons. 

 

Provide Congress with a complete 

assessment of potential prisoner fraud 

by revising the annual report to include 

the total number of tax returns filed by 

prisoners, the number selected for 

fraud screening, and the number 

verified false/fraudulent. 

The Inmate Tax Fraud Prevention Act of 

2008 requires the IRS to annually provide 

Congress a report that includes the number 

of false and fraudulent returns associated 

with prisoner filings. In addition, the IRS will 

respond to future congressional requests 

pertaining to prison-related tax fraud. 

Ensure that all tax returns filed using a 

prisoner SSN are processed through 

the EFDS and receive a prisoner 

indicator. 

Improvements were made to identify those 

individuals who are incarcerated, but no 

changes were made to the process to 

assign the prisoner indicator. 

Revise prisoner filters to verify the 

validity of the wages and withholding 

associated with prisoners incarcerated 

for a year who filed tax returns claiming 

a refund. 

Filters are in place to verify the validity of 

wages and withholding associated with tax 

returns filed using a prisoner SSN. In 

addition, the IRS improved its processes for 

identifying individuals incarcerated for a full 

tax year. 

Develop a process to assess the 

reliability of data received from Federal 

and State prisons and communicate 

with prison facilities that provide 

missing or inaccurate information in an 

attempt to obtain corrected information.

The IRS identified structural or formatting 

errors and duplicated records in the 

2012 Prisoner File. The IRS worked with 

the correctional systems to resolve the 

errors when possible. 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

TIGTA Report Recommendation Actions Taken to Date

2013-40-011 

Dec. 2012

Ensure that the validation and 

verification of future IRS Prisoner Files 

include a check for a prisoner using a 

deceased individual’s identity 

information and a comparison of the 

Institution and Prisoner Files to ensure 

that all facilities that house prisoners 

reported them. 

The IRS implemented processes to identify 

prisoner SSNs with a Date of Death. If the 

prisoner information was verified with Social 

Security Administration data, it was loaded 

into the EFDS with the “Validated” indicator 

left unchecked for the deceased prisoners 

on the prisoner file. Processes were also 

implemented in Calendar Year 2014 to 

ensure that prisons were reporting required 

prisoner information to the IRS. 

Legislation is needed that would 

permanently authorize the IRS to share 

data with the Federal and State prisons 

when it determines that prisoners may 

be using other individuals’ identities. 

The American Taxpayer Relief Act of 2012 

improved and made permanent the 

authority for the IRS to disclose false 

prisoner tax return information to Federal 

and State prisons. 

Source: TIGTA analysis of actions taken in response to prior audit reports.

This review is a follow-up of the IRS’s efforts to address conditions identified in TIGTA’s 

December 2010 report. Our review was performed with information obtained from the IRS 

Wage and Investment Division Headquarters Return Integrity and Correspondence Services 

function in Atlanta, Georgia, during the period July 2013 through June 2014. We conducted this 

performance audit in accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our audit objective. We 

believe that the evidence obtained provides a reasonable basis for our findings and conclusions 

based on our audit objective. Detailed information on our audit objective, scope, and 

methodology is presented in Appendix I. Major contributors to the report are listed in 

Appendix II. 

Page 5
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Results of Review 

Fraudulent Prisoner Tax Return Information Has Yet to Be Shared 

With Federal or State Prison Officials 

As of June 2014, the IRS has yet to complete needed agreements to begin sharing information 

related to false prisoner tax return information with Federal and State prison officials. This is 

despite the fact that the IRS was initially given the authority to share information with Federal 

prison officials in October 2008. Since October 2008, subsequent legislation temporarily 

expanded the IRS’s authority to share information with State prison officials,11 and permanent 

authority to share information was granted in January 2013. This authority was granted because 

Congress believes the ability of the IRS to share information with prison officials will enable 

them to take action to punish prisoners for perpetrating fraud and will help stop the abuse of our 

tax system. 

According to the IRS, prior to the enactment of the American Taxpayer Relief Act of 2012, the 

IRS worked with the Department of the Treasury to create a legislative proposal to reauthorize 

disclosure and to address the most significant concerns related to the sharing of this information 

identified by Federal and State prison officials in Calendar Year 2011. Addressing these 

concerns was intended to ensure the success of prison administrative proceedings upon restarting 

the disclosure program. The proposed language that addressed these concerns was included in 

the American Taxpayer Relief Act of 2012. 

IRS management also indicated that Memorandums of Understanding (MOU) establishing an 

information sharing agreement must be negotiated with the Federal Bureau of Prisons and each 

of the State Departments of Corrections. These MOUs outline how tax return information will 

be received, secured, and used by the receiving prison. In addition to the MOUs, the Federal 

Bureau of Prisons and the States must implement required information security safeguards before 

tax return information can be received. 

The IRS indicated that previously completed MOUs were no longer valid when 

authority to share information expired 

The Inmate Tax Fraud Prevention Act of 2008 and the Homebuyer Assistance and Improvement 

Act of 2010 granted the IRS with the temporary authority to share false prisoner tax return 

information with the Federal Bureau of Prisons and State Departments of Corrections through 

 

11 The American Taxpayer Relief Act of 2012 expanded the scope of sharing to allow disclosure of false prisoner tax 

returns and tax return information to contractors of State and Federal prison facilities, during a judicial or 

administrative proceeding, and to the representatives of the prisoner involved in such proceedings. 

Page 6
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

December 2011. As of December 31, 2011, the IRS had finalized MOUs with the Federal 

Bureau of Prisons and 22 State Departments of Corrections under this temporary authority. 

However, IRS management indicated that the 23 MOUs the IRS had finalized were no longer 

valid once the temporary authority to share prisoner tax return information expired on 

December 31, 2011. The IRS indicated that with the enactment of the new legislation, the 

previous MOUs could not be used because they did not reflect the expanded requirements 

included in the American Taxpayer Relief Act of 2012. Therefore, new agreements had to be 

executed with the Federal Bureau of Prisons and the State Departments of Corrections once the 

IRS was given permanent authority to share prisoner return information in January 2013. 

The IRS has created an MOU template that reflects the requirements of the American Taxpayer 

Relief Act of 2012. The IRS finalized the MOU template in July 2013 but then subsequently 

revised the MOU template in February 2014 to reflect changes to the Safeguarding guidelines. 

IRS management stated that the significant delays in finalizing the MOU template resulted from 

the number of reviews, approval signatures, and overall routing process. The IRS is taking steps 

to document and improve these processes to minimize future delays. 

Participation in the sharing of prisoner tax return information is voluntary on the part of the 

Federal Bureau of Prisons and State Departments of Corrections. As such, the IRS indicated that 

letters were sent to the Federal Bureau of Prisons, the State Departments of Corrections,12 and 

each State Governor as well as the Mayor of Washington, D.C. These letters explain the law, 

solicit participation, and indicate that the IRS will be reaching out to request a point of contact. 

These letters were not sent until February 2014, more than one year after permanent authority 

was granted. IRS management stated that leadership changes and the review process contributed 

to the delay in sending the letters. 

As of July 11, 2014, the IRS has received points of contact for the Federal Bureau of Prisons, 

Washington, D.C., and 44 State Departments of Corrections. The IRS has not received a point of 

contact from six States, but plans to continue to reach out to these States to establish a point of 

contact. The **********2******* is the only State that has signed an MOU. Three additional 

States are currently in the process of signing MOUs (****************2***********). Figure 

3 illustrates the timeline of actions taken by the IRS subsequent to January 2013, when 

permanent authority to share information on false prisoner tax returns was granted. 

 

12 See Appendix IV for an example of the letter sent to the State Departments of Corrections. 

Page 7
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Figure 3: Timeline of IRS Efforts to Share Prisoner Tax Return Data 

Date Event 

January 2013 

Legislation enacted that provides the IRS with permanent authority to share 

false prisoner tax return information with Federal and State prisons. 

IRS management establishes a cross-functional team to lead the development 

and execution of the MOU renewal strategy. 

July 2013 The IRS finalizes the MOU template. 

February 2014 

The MOU template is revised to reflect new Safeguarding guidelines. 

The IRS sends solicitation letters to the Federal Bureau of Prisons, the State 

Departments of Corrections, the State Governors, and the Mayor of 

Washington, D.C. 

March 2014 

Field government liaisons begin contacting all State Departments of 

Corrections to establish a point of contact that the IRS can work with to begin 

the MOU process. 

April 2014 

The IRS secures the first signed MOU with the*************2********. The IRS 

also receives notification that the *******2*******declines to participate in the 

program due to the financial burden associated with carrying out the 

administrative actions and the limited Departments of Corrections benefits at 

this time. 

July 2014 Three additional MOUs are in the approval process. The IRS is still working to 

secure a point of contact for six States. 

Source: IRS Return Integrity and Correspondence Services function. 

Once an MOU is signed, meetings to support the State Departments of Corrections in completing 

the Safeguard Security Report can begin. These reports are required to be completed before any 

data will be shared. The reports detail the specific processes, procedures, and security controls in 

place to protect Federal tax information. As of July 2014, no Safeguard Security Reports have 

been completed. 

Recommendation 

Recommendation 1: The Commissioner, Wage and Investment Division, should ensure that 

points of contact for the remaining six State Departments of Corrections are obtained and ensure 

that MOUs are timely established with the Federal Bureau of Prisons and all State Departments 

of Corrections that have indicated an interest in receiving false prisoner tax return information. 

Page 8
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Management’s Response: The IRS agreed with this recommendation. As of 

August 1, 2014, the IRS has identified points of contact for all State Departments of 

Corrections. The IRS stated that it is committed to securing signed MOUs with the 

Federal Bureau of Prisons and the State Departments of Corrections indicating interest in 

receiving information on false tax return information submitted by prisoners. According 

to the IRS, it is in discussions with 47 State Departments of Corrections, with 17 

expressing an interest in signing an MOU. Because execution of an MOU is contingent 

on actions of other agencies, and is beyond the control of the IRS, the IRS did not 

commit to an additional corrective action in this regard. 

Required Annual Prisoner Fraud Reports to Congress Are Not Timely 

and Do Not Address the Extent of Fraudulent Tax Return Filings by 

Prisoners 

The IRS is not timely providing annual reports on the filing of fraudulent tax returns by Federal 

and State prisoners to Congress. The Inmate Tax Fraud Prevention Act of 2008 requires the 

Secretary of the Treasury to annually submit to Congress and make publicly available a report on 

the filing of false and fraudulent returns by individuals incarcerated in Federal and State prisons. 

Such a report shall include statistics on the number of false and fraudulent returns associated 

with each Federal and State prison. The first report completed by the IRS reported on tax returns 

filed using prisoner SSNs in Calendar Year 2009. 

The IRS issued the Calendar Year 2009 report on the filing of false or fraudulent prisoner tax 

returns in September 2010. If the IRS had followed this general time frame for subsequent 

reports, it would have issued the Calendar Year 2010 report in September 2011, the Calendar 

Year 2011 report in September 2012, etc. However, the IRS did not issue the Calendar 

Year 2010 annual report until July 2012. The Calendar Year 2011 report was not issued until 

December 2013. As of June 30, 2014, the IRS has yet to issue the Calendar Year 2012 or 

Calendar Year 2013 required annual prisoner fraud reports. Figure 4 shows the time between the 

end of the calendar year and issuance of the annual prisoner tax fraud reports for Calendar 

Years 2009 through 2013. 

Page 9
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Figure 4: Issuance of the Annual Prisoner Fraud Reports to Congress 

Calendar Year Report Date Issued to Congress

Months Elapsed Since the 

End of the Calendar Year 

Calendar Year 2009 September 3, 2010 8 

Calendar Year 2010 July 3, 2012 18 

Calendar Year 2011 December 23, 2013 24 

Calendar Year 2012 Not Issued as of June 2014 18 

Calendar Year 2013 Not Issued as of June 2014 6 

Source: TIGTA analysis of the IRS’s Annual Reports to Congress. 

In response to our concerns with the delays in issuing the annual prisoner fraud report, the IRS 

indicated that some delays were a result of the approval process and others were directly related 

to the data analysis process. The IRS also indicated that preparing the report to Congress is labor 

intensive and it has limited resources. IRS management stated that they are taking necessary 

steps to document the process in order to minimize these delays in the future. 

To prepare the annual report, the IRS uses data contained in the EFDS. Most tax returns are 

screened and verified through the EFDS at the time the tax return is filed, which is generally 

between January and April each year. The IRS also tracks the number of potentially fraudulent 

prisoner tax returns it screens and/or verifies as well as those it confirms as fraudulent 

throughout the year. This information is reported weekly in internal IRS fraud reports, and we 

include it in our annual assessment of the individual tax return filing season. 

Furthermore, the IRS has most of the information it needs to prepare the annual prisoner fraud 

report soon after the end of the calendar year. For example, IRS management indicated that each 

February (after the end of the previous calendar year) they obtain information from the EFDS 

that identifies tax returns filed using a prisoner SSN. The data are then manipulated in order to 

be able to report prisoner information by State and institution. 

The annual prisoner fraud report does not address the extent of tax fraud 

committed by prisoners using **************2******************* 

The law requires the IRS to provide an annual report on the filing of false or fraudulent tax 

returns by Federal and State prisoners. **************2****************************** 

***********************2*******************. The report does not address the extent to 

which prisoners may be filing fraudulent tax returns**********2***************. For 

example, in the following tax fraud schemes, the prisoner is filing fraudulent tax returns 

*******************2*******************and this type of fraud is not included in the 

annual report. The report will only include those tax returns filed********2********. 

Page 10
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

On August 23, 2012, in Harrisburg, Pa., Theodore Scott, an inmate at Camp Hill 

Correctional Institution, was sentenced to 33 months in prison, three years of supervised 

release and ordered to pay $5,110 in restitution to the IRS for his role in a false claims 

tax scheme. Scott pleaded guilty to one count of conspiracy to defraud the United States 

by obtaining or aiding to obtain the payment of a false, fictitious or fraudulent claim. 

According to the indictment, Scott obtained the social security numbers of other persons

and used them to file false and fraudulent tax returns requesting refunds from the IRS. 

Scott also filed false and fraudulent tax returns in his own name. These false tax returns 

declared fictitious income amounts and claimed fraudulent tax refunds. As part of the 

scheme, the refund checks were directed to the addresses of co-conspirators who would 

deposit them [into] bank accounts that Scott controlled. 

On March 18, 2014, in Birmingham, Ala., Shermaine German was sentenced to 

66 months in prison, three years of supervised release and ordered to pay $788,280 in 

restitution to the government. German pleaded guilty in December 2013 to a tax 

conspiracy. German, now paroled from state prison, was an inmate at Donaldson 

Correctional Facility in Bessemer when he orchestrated the tax scheme. According to 

court documents, from January 2008 to May 2013, while an inmate at Donaldson, 

German obtained the names, birth dates and Social Security numbers of other people, 

often fellow inmates. He used their information to create false income tax returns that 

contained fabricated amounts of tax withholdings. German also created false power of 

attorney forms, which he mailed out of the prison along with the false income tax returns. 

Various other members of the conspiracy notarized the power of attorney forms and used 

them to cash or deposit income tax refund checks received as part of the scheme. 

To help determine the possible extent of the filing of false or fraudulent tax returns by Federal 

and State prisoners that is not included in the IRS’s annual reports to Congress, we performed 

data analysis using the direct deposit number included on tax returns filed using a prisoner SSN. 

Our analysis of direct deposit information from the tax returns identified as fraudulent and filed 

using a prisoner SSN identified other individuals who used the same direct deposit number to 

receive a refund. For example, our analysis of the 579,592 tax returns that the IRS identified as 

being filed using a prisoner SSN found that 157,041 were determined to be fraudulent by the 

IRS. Of the 157,041 fraudulent prisoner tax returns, 157,025 claimed refunds. The IRS was not 

able to prevent the issuance of a refund for 16,449 fraudulent returns that used a direct deposit 

account. There were 16,342 unique direct deposit accounts used on these 16,449 tax returns. 

Using the 16,342 direct deposit account numbers, we identified that 1,777 of the direct deposit 

account numbers were also used on another 47,321 tax returns. These 47,321 tax returns were 

filed********2*****************************. The tax refunds claimed on these tax 

returns totaled more than $102 million. For example, as Figure 5 shows, Bank Account A was 

used on a tax return filed with a prisoner SSN to receive a refund. The same bank account was 

also used on 7,645 additional tax returns. This type of analysis could assist the IRS in 

identifying characteristics of tax returns that may involve a prisoner refund scheme as well as the 

Page 11
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

possible extent of the filing of false or fraudulent tax returns by Federal and State prisoners. 

Figure 5 shows the number of tax returns and amounts deposited into the top 10 direct deposit 

account numbers used in these situations. 

Figure 5: Top 10 Direct Deposit Account Numbers 

Used on Both Prisoner and Nonprisoner Tax Returns 

Bank Account 

Tax Returns Using the Same 

Direct Deposit Account As a 

Tax Return Filed by a Prisoner Refunds Claimed 

Bank Account A 7,645 $30,481,992 

Bank Account B 1,855 $753,800 

Bank Account C 1,840 $6,875,604 

Bank Account D 1,740 $618,935 

Bank Account E 1,174 $345,053 

Bank Account F 1,124 $1,570,009 

Bank Account G 1,065 $1,949,558 

Bank Account H 871 $3,882,072 

Bank Account I 797 $1,936,025 

Bank Account J 734 $1,800,597 

Source: TIGTA analysis of Processing Year13 2013 files. 

Recommendations 

The Commissioner, Wage and Investment Division, should:

Recommendation 2: Ensure that the required annual report on the filing of false or fraudulent 

tax returns by Federal and State prisoners is issued to Congress timely. Given the availability of 

the data needed to compile the report, the report should be issued within nine months of the end 

of the applicable calendar year. 

Management’s Response: The IRS agreed with this recommendation. The IRS 

stated that it recognizes the need for timely submission of the annual prisoner fraud report 

to Congress and strives to compile complete and accurate data for its preparation. The 

IRS indicated that the source data for the report are obtained from the Scheme Tracking 

and Retrieval System, which contains the results of actions the IRS took in reviewing 

returns and determining probable fraud. Because return reviews must be completed 

before results are entered into the Scheme Tracking and Retrieval System, needed 

processing year-end data are not available until the following February or later. 

 

13 The calendar year in which the tax return or document is processed by the IRS. 

Page 12
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

According to the IRS, compiling and analyzing the data is a labor intensive process that 

must be performed before the report is drafted. In addition, the report is subjected to a a 

rigorous internal review as well as review by the Department of the Treasury, the Office 

of Management and Budget, and other affected agencies before submission to Congress. 

For the Calendar Year 2014 Prisoner Fraud Report, for which the data will become 

available in February 2015, the IRS will benchmark the report preparation and review 

process with the goal of a September 30, 2015, report date. The IRS will review and 

evaluate its performance after the report is released to establish a reasonable and realistic 

reporting time frame and expected delivery date for future reports. 

Recommendation 3: Develop processes to identify tax returns filed that have the same 

characteristics as confirmed fraudulent prisoner tax returns, including those fraudulent tax 

returns identified as part of the IRS’s other fraud detection programs, and determine whether 

these tax returns should be included in the annual report to Congress. 

Management’s Response: The IRS did not agree with this recommendation. The 

IRS stated that the methodology used in the annual report to Congress is consistent with 

the methodology used in reports of previous years. It reports all known false and 

fraudulent returns filed by prisoners as required by the statute. The IRS stated that the 

characteristics upon which our recommendation relies are not sufficiently reliable to 

conclude that all the returns identified are filed by inmates. According to the IRS, 

inmates are frequently also victims of identity theft, which can lead to an overstatement 

of fraudulent returns filed by prisoners. To ensure accuracy in reporting, the IRS 

accounts for returns when there is more than a circumstantial relationship to the identified 

prisoner. 

Office of Audit Comment: The IRS’s annual report only includes false and 

fraudulent tax returns filed using the SSN of a prisoner. The report does not include, as 

required, information related to the filing of false and fraudulent tax returns by prisoners. 

The characteristics we provided in our report were used to show information that could 

be used by the IRS to better determine the possible extent of the filing of false or 

fraudulent tax returns by Federal and State prisoners that is not included in the IRS’s 

annual reports to Congress. 

Processes Do Not Ensure That All Tax Returns Filed Using a Prisoner 

Social Security Number Are Assigned a Prisoner Indicator 

Our analysis of tax returns filed during Calendar Year 2013 identified 43,030 tax returns that 

were filed using a prisoner SSN that were not assigned a prisoner indicator. Tax returns not 

assigned prisoner indicators include: 

 16,950 (39 percent) paper tax returns that did not meet the IRS’s criteria for inclusion in 

the EFDS. Unlike all electronically filed tax returns being processed through the EFDS, 

Page 13
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

the IRS has established certain criteria that will result in some paper tax returns not being 

processed through the EFDS. 

 26,080 (61 percent) tax returns that did meet the criteria for processing through the EFDS 

but were not assigned a prisoner indicator. We provided these tax returns to IRS 

management for review. On June 26, 2014, management agreed that an SSN that was on 

the Prisoner File was used to file the tax return. The IRS subsequently indicated that it 

did not agree that a prisoner indicator should have been assigned for the majority of these 

tax returns because the return reported a balance due or zero balance. Notwithstanding 

the IRS’s response, we identified other balance due tax returns that were assigned a 

prisoner indicator. Analysis of the Calendar Year 2013 EFDS data identified 2,518 tax 

returns filed using a prisoner SSN with a balance due and the IRS assigned a prisoner 

indicator to the tax return. 

In addition, we identified another 3,139 tax returns filed using the SSN of a prisoner for which 

the IRS did not assign a prisoner indicator because the name on the tax return was not the same 

name associated with the SSN on the Prisoner File. However, we were able to match the name 

on the tax return with the name on the Prisoner File and asked the IRS why it could not match 

the names on the two files. The IRS’s review of these tax returns identified that the majority 

resulted from a two-character field (included on “preprinted” address labels provided to the 

taxpayer by the IRS) being loaded into the EFDS instead of the actual name control. A name 

control is the first four letters in an individual’s last name, e.g., the name control for Smith would 

be SMIT, but the two-character field NJ was loaded into the EFDS. The IRS is working to 

determine the cause of these programming issues. 

A prior TIGTA review found that not all tax returns filed using the SSN of a 

prisoner were assigned an indicator

In December 2010, we reported that 54,410 tax returns filed during Calendar Year 2009 using a 

prisoner SSN did not receive a prisoner indicator. In that report, we recommended that the IRS 

ensure that all prisoner tax returns are processed through the EFDS and receive a prisoner 

indicator. In response to our recommendation, IRS management stated that the IRS has reviewed 

the process for identifying prisoner tax returns early in Calendar Year 2010, and changes were 

made that would improve the IRS’s ability to identify those individuals who are incarcerated and 

assign a prisoner indicator to their account. When we questioned the IRS about the specific 

actions taken to improve the assignment of the prisoner indicator, it informed us that the process 

used to assign a prisoner indicator had not changed. As a result, the IRS still does not identify all 

tax returns filed using a prisoner SSN. 

We are concerned that management has not taken action to address this issue which we have 

previously raised to their attention. The assignment of the indicator is an automated process 

within the EFDS whereby the primary and secondary name and the SSN on a filed tax return are 

compared to the names and SSNs listed in the Prisoner File. If a match is identified, a prisoner 

Page 14
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

indicator is automatically set. All that is required is that the IRS processes all tax returns through 

the EFDS. As we have previously detailed, the IRS sets the specific criteria to be used to 

identify those tax returns with an indicator to be sent to screening and/or verification. For 

example, the IRS can exclude tax returns with a prisoner indicator that have a balance due from 

being sent to screening and/or verification. 

When tax returns filed using a prisoner SSN are not assigned the required indicator, the tax 

return will not be subjected to the IRS’s specialized prisoner fraud checks. All tax returns filed 

using a prisoner SSN should receive an indicator regardless of whether they appear fraudulent. 

The indicator should alert IRS employees who may be addressing other issues related to the tax 

return that the return was filed using a prisoner SSN. 

Recommendations 

The Commissioner, Wage and Investment Division, should: 

Recommendation 4: Ensure that all tax returns that are filed using a prisoner SSN are 

assigned a prisoner indicator. 

Management’s Response: The IRS agreed with this recommendation to the extent 

that it agrees that all accounts for which a tax return is filed using a prisoner SSN should 

be identified. The IRS stated that the Master File displays that information for all 

prisoner accounts to alert IRS employees addressing other issues related to the tax return 

or to that account. The IRS disagreed that an indicator should be assigned to returns for 

EFDS screening when a refund is not being claimed. 

Office of Audit Comment: The IRS incorrectly noted that the Master File could be 

used by IRS employees to identify tax returns filed using a prisoner SSN. Our research 

of the specific returns we identified found that not all of them were identified on the 

Master File. As we previously reported, we believe the IRS should assign a prisoner 

indicator to all prisoner tax returns. The assignment of a prisoner indicator is an 

automated process requiring the IRS to expend no additional resources to ensure that tax 

returns with a prisoner SSN are consistently assigned. 

Recommendation 5: Identify and address the cause associated with the 26,080 tax returns 

filed using the SSN of a prisoner that were not identified with the prisoner indicator. 

Management’s Response: The IRS agreed with this recommendation. The IRS will 

review the refund returns included in the 26,080 exception cases to ascertain why they 

did not receive a prisoner indicator by the EFDS. The IRS indicated that the remainder 

were no-balance or balance due returns and will not be reviewed as they would not have 

been considered potential fraudulent refund returns. 

Page 15
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Recommendation 6: Correct computer programming errors that resulted in not assigning a 

prisoner indicator to 3,139 tax returns because the name in the EFDS did not match the name 

associated with the SSN on the Prisoner File. 

Management’s Response: The IRS did not agree with this recommendation. The 

IRS stated that the condition that caused the 3,139 returns not to receive prisoner 

indicators by the EFDS is a systemic limitation caused by unperfected entity data 

included in the return record that is delivered to the EFDS. According to the IRS, the 

condition affected approximately three percent of transcribed paper returns. Other 

processing systems validate and perfect the data before the return information posts to the 

Master File, and the returns are still processed through the EFDS to screen them and 

assign a data mining score to assess fraud potential. 

Office of Audit Comment: We agree that these tax returns were evaluated using other 

EFDS filters. However, without the proper assignment of a prisoner indicator, these tax 

returns are not sent through those filters specific to a prisoner-filed tax return. 

Page 16
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Appendix I 

Detailed Objective, Scope, and Methodology 

Our overall objective was to evaluate the effectiveness of the IRS’s corrective actions to identify 

and reduce prisoner fraud. We conducted follow-up testing to evaluate the effectiveness of the 

IRS’s actions to address recommendations made in a previous TIGTA report.1

 In addition, we 

evaluated the IRS’s compliance with the continuing provisions of the Inmate Tax Fraud 

Prevention Act of 20082

 and the American Taxpayer Relief Act of 2012.3 To accomplish our 

objective, we: 

I. Assessed the adequacy of the IRS’s implementation of corrective actions in response to 

our prior audit.4

A. Determined the improvements the IRS has made to the process to identify individuals 

who are incarcerated and assign prisoner indicators to the tax returns filed using an 

SSN that is included on the Prisoner File. 

B. Determined if these improvements corrected the previously reported conditions. 

1. Performed data analysis using TIGTA’s Data Center Warehouse5 Individual 

Return Transaction File6 and the Prisoner File to identify tax returns filed using an 

SSN on the Prisoner File in Processing Year7 2013. 

2. Requested a data extract of the EFDS8 for all tax returns filed that have the 

prisoner indicator for Processing Year 2013. 

3. Established the reliability of the computer-processed data from Steps I.B.1. and 2. 

In order to accomplish this, we compared the information from the various files 

 

1

 TIGTA, Ref. No. 2011-40-009, Significant Problems Still Exist With Internal Revenue Service Efforts to Identify 

Prisoner Tax Refund Fraud (Dec. 2010). 2

 Pub. L. No. 110-428, 122 Stat. 4839. 

3

 Pub. L. No. 112-240, 126 Stat. 2313. 

4

 We did not perform audit work to assess the adequacy of the IRS corrective action for TIGTA, Ref. No. 

2013-40-011, Further Efforts Are Needed to Ensure the Internal Revenue Service Prisoner File Is Accurate and 

Complete (Dec. 2012) because the implementation date for these actions was in April 2014. 5

 The Data Center Warehouse provides data and data access services through the TIGTA intranet. 

6

 The Individual Return Transaction File contains data transcribed from initial input of the original individual tax 

returns during return processing. 

7

 The calendar year in which the tax return or document is processed by the IRS. 8

 The EFDS consists of a series of filters the IRS has designed to evaluate tax returns for potential fraud. It is the 

primary system used by the IRS to identify tax returns filed using prisoner SSNs. 

Page 17
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

and reviewed information from the IRS’s Integrated Data Retrieval System9 and 

the Prisoner File. We determined that the data are sufficiently reliable for the 

purposes of this report. 

4. Compared the files in Steps I.B.1. and 2. to determine if there are any returns in 

the EFDS data extract that were not identified in our data analysis. We 

determined why they were not in our data. 

5. Compared the files in Steps I.B.1. and 2. to determine if all prisoner tax returns 

we identified are included in the EFDS data extract and have the prisoner 

indicator. For any returns we identified as prisoner returns that are not included 

in the EFDS data extract, we determined if they met the criteria to be processed 

through the EFDS. 

II. Determined the status and effectiveness of the sharing of false or fraudulent tax returns 

filed by prisoners with the Federal and State prisons. 

A. Obtained copies of the completed MOUs and determined if MOUs have been set up 

with all State Departments of Corrections and the Federal Bureau of Prisons. 

B. Determined what, if any, data have been shared with prisons. 

III. Assessed the IRS’s compliance with the Inmate Tax Fraud Prevention Act of 2008 

requirement to provide an annual report on prisoner fraud to Congress. 

A. Determined if the IRS timely provided a report for Calendar Years 2009 through 

2013 to the Department of the Treasury for review and subsequently to Congress. 

B. Performed data analysis using the EFDS data extract provided by the IRS and 

TIGTA’s Data Center Warehouse Refund File10 to identify tax returns requesting 

direct deposits into the same accounts as fraudulent returns filed with prisoner SSNs 

in Processing Year 2013. We established the reliability of the Refund File by 

comparing the information in the file to the IRS’s Integrated Data Retrieval System. 

We determined that the data are sufficiently reliable for the purposes of this report. 

Internal controls methodology

Internal controls relate to management’s plans, methods, and procedures used to meet their 

mission, goals, and objectives. Internal controls include the processes and procedures for 

planning, organizing, directing, and controlling program operations. They include the systems 

for measuring, reporting, and monitoring program performance. We determined that the 

 

9

 The IRS computer system capable of retrieving or updating stored information. It works in conjunction with a 

taxpayer’s account records. 

10 The Refund File captures all refunds which are sent by the IRS to the Bureau of the Fiscal Service for processing. 

The refunds are sent by the Bureau of the Fiscal Service to the taxpayers in the form of bank account direct deposits 

or mailed paper checks. 

Page 18
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

following internal controls were relevant to our audit objective: ensuring that the provisions of 

the Inmate Tax Fraud Prevention Act of 2008 and the American Taxpayer Relief Act of 2012 

were implemented, identifying and evaluating the validity of the assignment of the prisoner 

indicator, and verifying that certain returns with prisoner SSNs are subject to compliance 

treatments. We evaluated these controls by obtaining information from IRS management about 

the status of data sharing with the Federal Bureau of Prisons and with the States and about the 

status of the annual prisoner fraud report to Congress. We analyzed data received from the IRS’s 

EFDS as well as the Individual Return Transaction File and the Prisoner File from TIGTA’s 

Data Center Warehouse to determine whether the prisoner indicators were being assigned 

correctly and whether certain returns were being reviewed. 

Page 19
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Appendix II 

Major Contributors to This Report 

Russell P. Martin, Acting Assistant Inspector General for Audit (Returns Processing and 

Account Services) 

Deann L. Baiza, Director 

Sharla J. Robinson, Audit Manager 

Karen C. Fulte, Lead Auditor 

Linda L. Bryant, Senior Auditor 

Steven D. Stephens, Senior Auditor 

Page 20
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Appendix III 

Report Distribution List 

Commissioner C 

Office of the Commissioner – Attn: Chief of Staff C 

Deputy Commissioner for Services and Enforcement SE 

Chief, Criminal Investigation SE:CI 

Deputy Chief, Criminal Investigation SE:CI 

Deputy Commissioner, Wage and Investment Division SE:W 

Director, Return Integrity and Correspondence Services SE:W:RICS 

Chief Counsel CC 

National Taxpayer Advocate TA 

Director, Office of Legislative Affairs CL:LA 

Director, Office of Program Evaluation and Risk Analysis RAS:O 

Office of Internal Control OS:CFO:CPIC:IC 

Audit Liaison: Director, Return Integrity and Correspondence Services SE:W:RICS 

Page 21
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Appendix IV 

Example Letter Sent to 

State Departments of Corrections 

Page 22
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Page 23
Page 24

Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Appendix V 

Management’s Response to the Draft Report 

Page 25
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Page 26
Page 27

Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Page 28
Page 29

Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 
Page 30

Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 
Prisoner Tax Refund Fraud: Delays Continue in 

Completing Agreements to Share Information With Prisons, 

and Reports to Congress Are Not Timely or Complete 

Page 31